Trump Tariff Exclusions Flood Commerce Amid Delay Concerns
(Bloomberg) -- The U.S. Commerce Department is wrestling with a flood of requests to exclude products from steel and aluminum import tariffs imposed by President Donald Trump, creating a backlog that’s sparked calls for action from lawmakers and trade groups.
Senators Orrin Hatch of Utah and Ron Wyden of Oregon, as well as the U.S. Chamber of Commerce and others, want the government to speed up the process and dedicate more resources to it.
The Commerce Department says it’s already boosted staff, and wants approval from Congress to use more of its budgeted funds to help solve the problem.
Companies that win exclusions will be granted refunds for the tariffs, which they are currently paying. But the delays could mean tying up millions of dollars that a business would rather invest in facilities and employees, said Ann Wilson, senior vice president of government affairs for theMotor & Equipment Manufacturers Association, which represents vehicle suppliers.
“This apparent backlog creates uncertainly for our members, which puts businesses –- and jobs -- at risk,” Wilson said in a statement.
Some 3,500 exclusion requests have yet to be reviewed, while about 550 had been processed as of April 27, according to the Commerce Department. No decision on a request can be made until it’s been reviewed and posted online for 30 days for any objections.
Commerce Secretary Wilbur Ross said in a statement that he understands the concerns of businesses, and that the department “is making an unprecedented effort to process the requests expeditiously.”
Companies are asking for relief from 25 percent tariffs on steel imports and 10 percent on aluminum. The goods in the exclusion requests posted so far range from automotive components and specialized steel products used by manufacturers, to piano wire and stainless-steel fish hooks.
Trump imposed the tariffs March 23 on grounds the imports pose a threat to national security, and he must decide by Tuesday whether to extend temporary exemptions for Canada, Mexico, the European Union and other countries. The administration plans to extend relief to some countries, but not all, Ross said.
Treasury Secretary Steven Mnuchin said Trump discussed trade when French President Emmanuel Macron and German Chancellor Angela Merkel were in Washington last week but hasn’t yet decided on exemptions for any European countries.
"Of course the issues came up and the president has not made any decision yet," Mnuchin said during an interview with Maria Bartiromo on Fox Business Network.
Separately, Trump had proposed tariffs on $150 million in Chinese goods in response to the theft of intellectual property, prompting threats of retaliation from China and fears of a widening trade war. Mnuchin leads a delegation this week to China for talks on what the U.S. sees as Beijing’s unfair trading practices.
"We’re looking to have a very frank discussion on trade; on issues of the trade imbalance," Mnuchin said in the Fox Business interview. "President Trump has been very clear for the last year that he’s very focused on the trade deficit and we’re looking to correct that."
The process for seeking exclusions from the steel and aluminum import tariffs involves companies filing detailed forms in which they identify the raw material they’re importing and the specific product produced. Each submission is reviewed to ensure it’s complete, put online for any objections, and finally a decision is made and posted. The process normally won’t exceed 90 days, the department said.
But the lag time has meant there are thousands of submissions waiting for examination, and no rulings on any have been made yet.
Hatch, the Republican chairman of the Senate Finance Committee, and Wyden, the panel’s top Democrat, sent a joint letter to Ross on April 19 asking for the department to “dedicate the resources necessary to complete the product exclusions process expeditiously.”
“The significant delays in publicly posting product exclusion requests risk serious and permanent financial harm to many petitioners,” the senators wrote. They also asked for other improvements in the process, including clarifying how proprietary business information will be protected.
The Chamber of Commerce said in a statement that it agrees with the concerns raised by the senators about the product exclusion process, and that “it is important that these concerns be addressed.” The Business Roundtable, an association of chief executive officers, which opposes the tariffs, said it’s also concerned about the “overly burdensome” process and lengthy backlog.
The Commerce Department said almost all of the submissions yet to be reviewed were received within the last 12 days, and that a third of the requests so far have come from just 10 companies. One company submitted 1,167 requests, the department said. Many companies also didn’t file a separate request for each product, as required, and 930 initial applications had to be rejected for technical reasons and refiled.
The number of staff handling the requests and helping companies to submit their forms has been expanded to 19 from six, and Ross has asked Congress to reprogram $3.3 million in its budget to help deal with exclusion requests, the department said.
Many companies are asking for exemptions specifically because they can’t procure the amount of raw material they need from U.S. steel or aluminum producers, according to filings posted so far on regulations.gov.
Schick Manufacturing Inc. of Connecticut, for example, is asking for an exclusion for the blade steel it imports from Japan for shaving razors because “historically there has never been U.S. production of this material,” according to a submission.
Some companies are seeking exclusions because they’ve already made commitments for imports now subject to the tariff.
Seneca Foods Corp., a fruit and vegetable processor based in Marion, New York, with 28 facilities across the U.S., said in its exclusion request that it agreed in 2017 to buy 11,000 tons of steel for can manufacturing from a mill in China, for delivery this year and early 2019. The company said it has been unable to adjust the order to avoid the additional cost for a product already shipped or produced.
“We respectfully request an exclusion to allow us to bring in this already committed material without a penalty,” the company said in its filing.
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